How to Get Rid of PMI

First, check your LTV (it takes 5 minutes)

Every PMI removal method turns on one number: your loan-to-value ratio (LTV), your mortgage balance divided by your home’s value. Before calling anyone, work out where you stand:

• Current balance: pull it from your latest mortgage statement or your servicer’s app. Use the principal balance, not the payoff quote.
• Original value: for a purchase loan, the lesser of the purchase price and the appraised value at closing. This is the number the federal 80%/78% rules use, not today’s market value.
• Current value: a rough market estimate is enough for planning. Only Way 4 and Way 5 use it, and both will require a formal appraisal later.

Divide the balance by each value. If the balance is at or under 80% of original value, you can request cancellation today (Way 1). If it is under roughly 75% to 80% of current value, a new appraisal or a refinance may work even sooner (Ways 4 and 5). The home equity calculator does this arithmetic for you and shows how much equity you have on both measures.

One caveat before the five ways: they apply to borrower-paid PMI on conventional loans. If you have lender-paid PMI (LPMI), there is no separate premium to cancel; the cost is built into your interest rate for the life of the loan, and the only exit is refinancing. If your monthly statement shows no PMI line item but your rate seems high for when you bought, ask your servicer which type you have.

Way 1: Request cancellation at 80% LTV (the move most people miss)

The Homeowners Protection Act gives you the right to have PMI cancelled on your written request once your loan balance reaches 80% of the home’s original value. You can qualify two ways: on the date the original amortization schedule says the balance hits 80%, or earlier, the moment your actual balance reaches 80% because you paid extra. To approve the request, your servicer can require that:

• You have a good payment history: no payment 30+ days late in the past 12 months and none 60+ days late in the past 24 months.
• You are current on the loan.
• There are no junior liens on the property (a home equity loan or HELOC can block cancellation until it is paid off or subordination issues are resolved).
• You provide evidence the value has not declined below the original value, if the servicer asks. That may mean a broker price opinion or appraisal, typically at your cost ($100 to $600).

The process itself is simple. Call the number on your statement and ask for the PMI or mortgage insurance department, confirm your cancellation date and exactly what documentation they require, then send a short written request: your name, loan number, property address, a sentence stating you are requesting PMI cancellation under the Homeowners Protection Act because your balance has reached 80% of original value, and your signature. Keep a copy. Once PMI is cancelled, the servicer must refund any unearned premiums within 45 days.

If the servicer says no, get the reason in writing. A denial for a fixable reason (a junior lien, a value question) tells you exactly what to solve; a denial that ignores the federal rules is worth escalating to the CFPB.

Way 2: Wait for automatic termination at 78% (it works, but it costs you)

If you do nothing, the law still protects you: your servicer must automatically terminate PMI on the date the loan balance is first scheduled to reach 78% of the original value, provided you are current on payments. If you are behind on that date, PMI ends once you catch up. No request, no appraisal, no paperwork.

There is one more backstop: PMI cannot outlive the midpoint of your loan term. Even if your balance has not hit 78% (possible with interest-only periods or a balloon), PMI must end at the halfway point of the amortization schedule, 15 years into a 30-year loan, if you are current.

So why not just wait? Two reasons. First, the gap between 80% and 78% is real money: on our example loan below, the schedule crosses 80% at 7 years 11 months but does not reach 78% until 9 years 1 month. Waiting those extra 14 months costs about $3,150 in premiums for nothing. Second, automatic termination runs on the original amortization schedule, not your actual balance, so extra payments do not move the automatic date up. A written request at 80% is the only way extra payments pay off early.

Way 3: Prepay principal to reach 80% sooner (worked example)

Since borrower-requested cancellation keys off your actual balance, every extra dollar of principal moves your PMI removal date forward. Here is the full math for a typical case: a $400,000 home bought with 10% down, so a $360,000 loan at 6.5% for 30 years. The regular payment is $2,275 a month, and at a mid-range PMI rate of 0.75% of the loan per year, PMI adds about $225 a month on top.

The extra $200 a month pulls the 80% request date forward by 2 years 7 months and cuts total PMI paid by about $6,975, and that is before counting the interest the prepayments save over the rest of the loan. A lump sum works the same way: any one-time principal payment that pushes the balance to $320,000 unlocks the written request immediately.

Two practical notes. Tell your servicer that extra payments are principal-only, otherwise some apply them to the next month’s payment. And once the balance crosses 80%, do not wait to be told: send the Way 1 request that week. Run your own loan through the extra payment calculator to see exactly when a given extra amount gets you to 80%.

Way 4: Get a new appraisal after your home has gained value

The federal 80%/78% rules use original value, but Fannie Mae and Freddie Mac (which own most conventional loans) let servicers cancel PMI based on current market value. If your home has appreciated or you have made major improvements, this can beat the amortization schedule by years. The catch is seasoning rules:

• Loan 2 to 5 years old: most servicers require the balance to be at or below 75% of the new appraised value.
• Loan more than 5 years old: the threshold relaxes to 80% of the new appraised value.
• Substantial improvements (an addition, a major renovation, not paint and carpet) can waive the 2-year wait: you can request value-based cancellation at 80% right away, with documentation of the work.

These thresholds are servicer and investor rules, not federal law, and they vary: loans not owned by Fannie or Freddie may follow different investor guidelines, so always confirm your servicer’s exact policy first. Expect the servicer to order the appraisal or broker price opinion themselves (you cannot just hand them one you commissioned) and to charge you for it, typically $100 to $600. The same payment-history and junior-lien conditions from Way 1 apply.

The math is often compelling. On our example loan, if the $400,000 home appreciates to about $469,000 after two years, the balance is already under 75% of current value and PMI can go away roughly 6 years ahead of the original-value schedule. A one-time appraisal fee that erases a $225/month premium pays for itself in the first two or three months.

Way 5: Refinance out of PMI

A refinance replaces your loan entirely, and if the new loan is at or below 80% of the home’s current appraised value, the new loan simply has no PMI. This is the one method that works regardless of your current servicer’s rules, and it is the standard exit from lender-paid PMI and (as covered below) FHA mortgage insurance.

But be honest about the trade. Refinancing costs real money, typically 2% to 6% of the loan in closing costs, and it resets your rate and term. It makes sense when the pieces line up:

• Your equity puts the new loan at or under 80% LTV of current value, so the new loan is PMI-free.
• The new rate is at or below your current rate, or close enough that killing PMI covers the difference.
• The monthly savings (rate savings plus the dropped PMI) repay the closing costs within a few years, comfortably shorter than how long you plan to keep the home.

If your current rate is well below today’s market, refinancing purely to shed a $225 premium is usually a losing trade; Ways 1, 3, and 4 remove PMI without touching your rate. Run the break-even with the refinance calculator before committing: it weighs the new payment, closing costs, and how long you will stay.

FHA loans are different: MIP usually does not cancel

Everything above applies to PMI on conventional loans. FHA loans carry a different product, the mortgage insurance premium (MIP), and the Homeowners Protection Act’s cancellation rights do not apply to it. For FHA loans originated since June 2013, the rules are blunt:

• Less than 10% down: annual MIP lasts for the life of the loan. It never falls off, no matter how much equity you build.
• 10% or more down: annual MIP ends after 11 years.

For most FHA borrowers, the realistic way out is refinancing into a conventional loan once you have roughly 20% equity, which lets the new loan skip PMI entirely, or at least into a conventional loan with cancellable PMI if you are close. Whether that trade wins depends on the rate you would give up: an FHA borrower with a low legacy rate may be better off keeping the loan and eating the MIP, while one whose rate is near market almost always comes out ahead. The refinance math in Way 5 applies unchanged.

All 5 methods at a glance

Here is the whole playbook in one table. The fastest path for most people is a combination: prepay or ride appreciation to the threshold, then send the written request the day you cross it.

Whichever route you take, the theme is the same: PMI removal rarely happens at the earliest possible moment unless you ask. Know your number, watch it, and put the request in writing the day you qualify.